The epitome of luxury and a cornerstone in the perceived value of a luxury brand
A universal concept
In exploring the origins of the term 'luxury', we find that the earliest use in the modern sense of the word, comes from the mid-17th century. It comes via the Old French 'luxurie' which derives from ‘luxus’, and according to the Oxford Latin Dictionary (1992), this means ‘soft or extravagant living, sumptuousness, luxuriousness, opulence, and indulgence’.
The term luxury is however widely accepted as being a subjective notion, and whilst a myriad of concepts have been offered in the quest to provide it with distinct shape and boundaries, it remains difficult to precisely define. Today, it continues to defy universal definition and takes on its meaning based on context and culture nuances. There is however, consensus, that luxury typically refers to the highest standards in quality, creativity, craftsmanship, and other attributes which aim to contribute to a superlative consumer experience.
Luxury is a plexus of meanings; it is an intricate notion that is ascribed to products, services or experiences, which are perceived as transcending utility, necessity, or functionality. Hence, luxury can never be characterised by a single attribute; it is multifaceted; framed by a seamless fusion of creativity and originality; exclusivity and superiority; of materials, and craftsmanship, aesthetics, communication, and distribution. Luxury combines authenticity with romanticity; and is storytelling at its very best.
The TEN LEVERS of Luxury
At A New Level Luxury, we have developed the TEN LEVERS of Luxury Framework, underpinned by our innovatory AI-powered strategy tool. The model is built on ten specificities that form the distinct characteristics of luxury goods and services, and thereby translate synchronously into the strategic 'levers' that define and strengthen competitive advantage. This provides the basis for an objective assessment and scoring mechanism, which identifies strengths and weaknesses, and highlights areas for improvement .
Our framework provides a comprehensive analysis of key competitive variables which, combined with specialised metrics, enable measurement and evaluation. Each lever represents a potential basis for competitive advantage, or, a point of differentiation; and individual businesses must tactically leverage each component, alongside interplays with other levers, to reach a designated strategic goal. The aggregate score across all ten levers indicates the efficiency and intensity of competitive advantage.
The TEN LEVERS
1 > AUTHENTICITY
Authenticity is the epitome of luxury. It represents a cornerstone in the perceived value of a luxury brand, however, it is often misunderstood, and presumed to mean merely genuineness, or venerableness. The concept of authenticity comprises distinct considerations which may include - heritage, character, integrity, credibility, and craftsmanship.
2 > QUALITY
An expectation of uncompromising quality, is at the core of luxury. The most successful luxury goods require compulsively stringent processes across the end-to-end supply chain, to ensure the highest standards are maintained, which serve to mitigate the risks of premature deterioration over time. Whilst the concept of luxury is nuanced, quality is unmistakeable, and goes beyond the aesthetics to the promise of superior raw inputs and materials.
3 > CRAFTSMANSHIP
Craftsmanship is an expression of outstanding levels of skill and expertise, employed in creating the finest products, and is central to the production of luxury goods; from bespoke furniture to high fashion haute couture pieces. The appeal of superior skilfulness, elevates the value and experience of a product, and promotes appreciation beyond its functional value to the consumer.
4 > PERSONALISATION
Customer centricity has never been more important for luxury brands. We consume brands for what they mean to us on a deeper more meaningful level – for what they represent in terms of our own desires, beliefs, values and subconscious ideas about the world we live in. The more a brand seeks to anticipate and respond to the customer’s desires, empowering expressions of individual identities, the more value the brand creates.
5 > BRANDING
Luxury branding engages the full repertoire of all the core brand elements, transcending the visual elements such as logo, symbols and colour schemes. It communicates the brand's voice and personality with a promise of superiority and a proposition of uniqueness and distinctiveness. Successful branding encapsulates the luxury brand story and evokes an emotional connection, alongside a conspicuous aura of desirability, and timeless seduction. for the consumer.
6 > PRESTIGE
Luxury has always been about transcendence. We place value on brands beyond the superficial layer of aesthetics and brand promises, and consequently the prestige ascribed to a brand, is directly proportionate to this. Climbing the prestige hierarchy is predicated on brands delivering both real tangible and intangible value, evoking feelings of admiration and transcending our immediate reality into a past-present-future continuum.
7 > EXCLUSIVITY
Whilst the nature of rarity historically referred to the use of scarce and valuable materials, today, it refers to being uncommon and subjectively rare. With Millenials and Gen Z accounting for the entire growth of the global luxury market in recent years, brands must seek to be more inventive with creating demand in an increasingly saturated market, to attract a new generation of customer adept with social media, craving uniqueness, and demanding new ideas from luxury brands.
8 > PRICE-PREMIUM
The ability to charge a high premium, requires consumers to perceive sufficient value in the item, which may be achieved through amplification of the other components. It is a highly favourable position for a business, and studies have shown that consumers often use price as a heuristic for quality, leading to expensive products being perceived as being of higher quality.
9 > TECHNOLOGY
As luxury brands seek to find the balance between tradition and innovation, disruptor technologies like blockchain and NFTs are redefining the luxury landscape and brands will be expected to respond accordingly. Online is expected to soon surpass all other luxury sales channels. The share of online sales for personal luxury goods is predicted to grow to 33% by 2030, driven by brands' own websites and new technologies.
10 > SUSTAINABILITY
Whilst not traditionally a luxury dimension, sustainability, and environmental responsibility is today increasingly gaining prominence as a new standard of luxury. There is a paradigm shift and affluent consumers are increasingly pursuing positive changes in their lives and high-end brands face important questions about the way their businesses impact the world.
An evolving concept
Today, the concept of luxury is evolving, with new trends heralded by digitalisation and a strong new wave of conscious social change, embracing elevated, sustainability-focused living. Modern luxury is increasingly leaning into a new narrative which seeks to leave behind traditional notions of luxury linked to excess, extravagance, and antiquity, and strives for a timeless and meaningful identity harnessed by the force of digital. Wealthy and affluent consumers are increasingly pursuing positive, progressive changes in their lives and are expecting luxury brands to do better. In response, to remain relevant, brands are promoting meaningful, mindful and less disposable luxuries, a trend predominantly linked to millennials and Gen Z.
The Business of Luxury
Industry incumbents subscribe to a complex matrix of common principles, and whilst the term continues to elude standard definition, expert studies conducted over recent decades have identified a broad spectrum of distinguishing components that define luxury goods and services. Critically, the most prestigious and quintessential luxury brands holistically capture each of the ten levers, however the term 'luxury' is often assigned where some components are absent. This is possible often due to discovering an optimal balance which leverages varying levels of pressure to each lever to the perfect degree.
The Global luxury market continues to expand, defying economic shocks and scientific predictions, and is estimated to be worth presently $1.2trn, with a predicted compound annual growth rate (CAGR) of 6% for the next decade.The UK luxury industry, often described as the jewel in the crown of British business, contributes approximately £50bn to the UK economy (2.5% of GDP), and employs more than 160,000 people (0.5% of the total workforce). The wide range of products and services across industries, from clothing & footwear, to food & drink; fragrances, and automobiles, to jewellery and hospitality; is ever expanding, as the needs and expectations of consumers continue to shift and evolve. Businesses must remain alert and responsive, to navigate the changing landscape, whilst delivering the highest standards of excellence and creativity.